Ontario Premier Dalton McGuinty resigns

[Segnosaur]

- The province is massively in debt, and now its considered a "have not" province. And unlike the federal government, it doesn't look like there's much in the way of plans to fix the problem.

McGuinty had little to do with the recession.

I never claimed he did... its his response to the recession that I'm concerned about. As I pointed out, the Ontario government doesn't really seem to have a plan to handle it.

(And I do have to wonder... how many people have both condemn Harper for his deficit, yet say the Ontario Liberals were ok to run a deficit because "it's a recession!")

Manufacturing was hit hard all over north america and Ontario is pretty manufacturing intensive.

Actually, the service sector is a much higher contributor to Ontario's GDP than manufacturing. (Ontario may have more manufacturing jobs overall, so we would be more affected by a slowdown in manufacturing jobs than, for example, Alberta, but I don't think it would be enough to account for the big drop.

And to be honest, manufacturing jobs have been disappearing for years, even before the recession.

http://web.archive.org/web/20061206041620/http://www.2ontario.com/facts/fact02.asp

http://www.statcan.gc.ca/pub/75-001-x/2009102/charts-graphiques/10791/c-g000b-eng.htm

 

[FreshHat]

McGuinty raised the minimum wage from $6.85/hour (a rate the Tories left unchanged for years) to $10.25/hour, a move which had a great positive impact on the life of low wage earners and their families.

On a personal level, he always comes across as Mr. Prissy Pants, which makes him less than endearing. A sudden departure and proroguing the Ontario Legislature doesn't help his image.

I fear the public backlash may boost Hudak and his Mike Harris style conservatism.That would be unpleasant,IMO.

 

[Segnosaur]

McGuinty raised the minimum wage from $6.85/hour (a rate the Tories left unchanged for years) to $10.25/hour, a move which had a great positive impact on the life of low wage earners and their families.

Unless of course you were actually unemployed, and found that you couldn't get a job because increases in wages caused companies to cut their labor forces.

From: http://www.thestar.com/business/article/407176--minimum-wage-set-to-rise
Michele Campolieti, whose latest research on minimum wages, published in the journal Industrial Relations, examines the Labour Force Survey and other materials. He says that for every 10 per cent increase in the minimum wage, you might see a 1 to 3 per cent decline in jobs.

Now, I do realize that not all economists agree; however most at least acknowledge that the best time to raise the minimum wage is when the economy is strong, so increases that happened perhaps 6-7 years ago might not affect employment. However, the last increase was right in the middle of the recession.

I fear the public backlash may boost Hudak and his Mike Harris style conservatism.That would be unpleasant,IMO.

I have no problems with a Mike Harris-style of economy. However, I fear that Hudak may be on the social-conservative side of things (he has been publicly pro-life for example), something I would strongly oppose.

 

[Captain.Sassy]

(And I do have to wonder... how many people have both condemn Harper for his deficit, yet say the Ontario Liberals were ok to run a deficit because "it's a recession!")

Not me, though I do take issue with the way the fed tories portrayed the deficit... as I've pointed out before, had revenues as a share of GDP stayed the same as before the cons took over, we wouldn't have run a deficit (or at least had a very trivial one) over the course of the recession... stimulus spending and all.

Actually, the service sector is a much higher contributor to Ontario's GDP than manufacturing.

ya don't say!?!?

(Ontario may have more manufacturing jobs overall, so we would be more affected by a slowdown in manufacturing jobs than, for example, Alberta, but I don't think it would be enough to account for the big drop.

And to be honest, manufacturing jobs have been disappearing for years, even before the recession.

Yeah true, mfg has been in relative decline for a while (not just here but in many places) and in absolute decline in Ontario since about the mid 2000s.

As for the recession, 80% of lost Ontario GDP from 2008 to 2009 was due to declines in manufacturing.

here's the cansim:
http://www5.statcan.gc.ca/cansim/a2...naics&tabMode=dataTable&srchLan=-1&p1=1&p2=-1

 

[Captain.Sassy]

Michele Campolieti, whose latest research on minimum wages, published in the journal Industrial Relations, examines the Labour Force Survey and other materials. He says that for every 10 per cent increase in the minimum wage, you might see a 1 to 3 per cent decline in jobs.

If that's true, the minimum wage group (including the job losers) is still better off after the raise.

 

[Caper]

If that's true, the minimum wage group (including the job losers) is still better off after the raise.

Geeze that's a 6% to 18% loss of those jobs. Also, what about the families whose wage earners had their wages slashed so the same business's could raise the wages of those making minimum wage? Or the group of people who never got raises so business could bring the minimum wage earners up?

 

[Corsair 115]

And I do have to wonder... how many people have both condemn Harper for his deficit...

The only people I recall seeing condemning Harper for the federal budget deficit are the more fiscally conservative-minded conservatives. The other side of the aisle tends to claim there should have been more stimulus spending, which would translate into a larger deficit.

 

[Segnosaur]

And I do have to wonder... how many people have both condemn Harper for his deficit, yet say the Ontario Liberals were ok to run a deficit because "it's a recession!"

Not me, though I do take issue with the way the fed tories portrayed the deficit... as I've pointed out before, had revenues as a share of GDP stayed the same as before the cons took over, we wouldn't have run a deficit (or at least had a very trivial one) over the course of the recession... stimulus spending and all.

First of all... keep in mind that while Conservative tax cut policies may have added to the deficit (assuming of course that they didn't provide a stimulus effect), that the Liberals would likewise had plans prior to the recession that would have reduced revenues and increased spending.

see: http://www.scribd.com/doc/6308750/Liberal-Party-of-Canada-2008-English-Platform#page=12

Secondly, there are some people who think that governments should tax enough to cover what's needed to provide necessary services, and no more. Back in the 1980s/1990s government revenue increased (partly as a result of tax increases brought in under Mulroney, partly due to a booming global economy.) As a result, the deficit was eliminated. Yes, we still have a debt that has to be dealt with, but the problem was largely handled.

Personally, I would rather see a government with lower taxes, so that they have to justify/convince me that some new program is necessary, rather than have higher taxes (where they "sit on" collected cash) which would allow them more flexibility to waste money.

(Ontario may have more manufacturing jobs overall, so we would be more affected by a slowdown in manufacturing jobs than, for example, Alberta, but I don't think it would be enough to account for the big drop.

And to be honest, manufacturing jobs have been disappearing for years, even before the recession.

Yeah true, mfg has been in relative decline for a while (not just here but in many places) and in absolute decline in Ontario since about the mid 2000s.

As for the recession, 80% of lost Ontario GDP from 2008 to 2009 was due to declines in manufacturing.

here's the cansim:
http://www5.statcan.gc.ca/cansim/a2...naics&tabMode=dataTable&srchLan=-1&p1=1&p2=-1

I'll take your word for it (since the data isn't apparent from the link, but it does look like it can be extracted.)

But here is something to consider: Between 2007 (prior to the recession) and 2011, manufacturing sales dropped in Ontario roughly 10%. Yet in Canada as a whole, they only dropped 5%.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/manuf28-eng.htm

... for every 10 per cent increase in the minimum wage, you might see a 1 to 3 per cent decline in jobs.

If that's true, the minimum wage group (including the job losers) is still better off after the raise.

Possibly, although it depends on things like: Does the cost of living rise?

And more importantly, is it better for society as a whole.

 

[Captain.Sassy]

First of all... keep in mind that while Conservative tax cut policies may have added to the deficit (assuming of course that they didn't provide a stimulus effect), that the Liberals would likewise had plans prior to the recession that would have reduced revenues and increased spending.

Could be.

Personally, I would rather see a government with lower taxes, so that they have to justify/convince me that some new program is necessary, rather than have higher taxes (where they "sit on" collected cash) which would allow them more flexibility to waste money.

I think our tax rate is already reasonable / low by international standards. If we have to raise taxes a bit to meet the requirements of our social, environmental, regulatory etc. safety nets then so be it.

I'll take your word for it (since the data isn't apparent from the link, but it does look like it can be extracted.)

But here is something to consider: Between 2007 (prior to the recession) and 2011, manufacturing sales dropped in Ontario roughly 10%. Yet in Canada as a whole, they only dropped 5%.

Ontario mfg is largely auto sector... where the auto sector goes, so goes Ontario.

Possibly, although it depends on things like: Does the cost of living rise?

And more importantly, is it better for society as a whole.

Re. cost of living, I assume he factored this into his analysis

re. society better off as a whole, you're getting into utilitarian arguments, compensation, potential pareto optimality etc. IMO, if you transfer 1$ from a rich person to a poor person, society is better off (ceteris paribus) because the 1$ is worth more to the poor person. Not everyone agrees.

 

[Caper]

re. society better off as a whole, you're getting into utilitarian arguments, compensation, potential pareto optimality etc. IMO, if you transfer 1$ from a rich person to a poor person, society is better off (ceteris paribus) because the 1$ is worth more to the poor person. Not everyone agrees.

I think that can be true.... but man can that free buck make people lazy.

 

[Segnosaur]

Personally, I would rather see a government with lower taxes, so that they have to justify/convince me that some new program is necessary, rather than have higher taxes (where they "sit on" collected cash) which would allow them more flexibility to waste money.

I think our tax rate is already reasonable / low by international standards.

In the context of this discussion, it doesn't really matter what our tax rate is compared to other countries. What is important is what I, as a Canadian, pay and expect to receive from our tax system. It doesn't matter if some european country enacts a 99% income tax.

As an analogy, whether someone steals $1 or $100, its still theft. Similarly, if I'm overtaxed at (lets say) 22%, then the fact that others are overtaxed at 99% doesn't really matter.

If we have to raise taxes a bit to meet the requirements of our social, environmental, regulatory etc. safety nets then so be it.

I already addressed that earlier when I stated in my earlier post:
Secondly, there are some people who think that governments should tax enough to cover what's needed to provide necessary services, and no more.
So yes, I have no problem with taxes to handle things like medicare, or certain infrastructure. I'm talking about extra tax money that's been collected, above and beyond the basic services that we traditionally receive from the government.

If the government wants to bring in a "national daycare" program, or a "buy everyone a lawn gnome" program, let them make a case for it... have them say "we'll increase your taxes but you'll get this program in return". I find that better than just dipping into some surplus, where the effects of the spending are hidden.

Re: minimum wage increases and job losses...

re. society better off as a whole, you're getting into utilitarian arguments, compensation, potential pareto optimality etc. IMO, if you transfer 1$ from a rich person to a poor person, society is better off (ceteris paribus) because the 1$ is worth more to the poor person. Not everyone agrees.

Except the problem is, a minimum wage increase isn't transferring from a rich person to a poor person. It can also transfer from one poor person to another (if for example it increases costs at the local Wal-Mart or McDonald's to other 'working poor'), or from a middle-class person to the poor person (if an increase in minimum wage decreases profits, which affect retirement plans.)

 

[Segnosaur]

- The province is massively in debt

McGuinty had little to do with the recession.

I did a little more digging.

In the approximately 9 years that McGuinty has been in power, total spending has gone up 64%, or roughly 7% per year. (The current inflation rate is 2% and I believe it has been through most of McGuinty's time as premier.)

For comparison, look at the federal conservatives, who took power a couple of years after the Liberals. They increased spending by roughly 4% a year (perhaps more than I'd like) between 2006-2012, much less than the Ontario government in roughly the same time frame. (And while it could be argued that the provincial Liberals were just "replacing" cuts made by the Mike Harris tories, the federal Conservitives likewise had to replace military infrastructure neglected by Chretien.)

So yes, the recession may have hurt the balance sheet in Ontario, but the provincial Liberal's habit of spending like a drunken sailor (no offense Captain) was also a factor.

http://taxpayer.com/sites/default/files/OntarioDebt_Backgrounder.pdf
http://en.wikipedia.org/wiki/2006_Canadian_federal_budget
http://en.wikipedia.org/wiki/2012_Canadian_federal_budget

 

[Segnosaur]

And I do have to wonder... how many people have both condemn Harper for his deficit...

The only people I recall seeing condemning Harper for the federal budget deficit are the more fiscally conservative-minded conservatives. The other side of the aisle tends to claim there should have been more stimulus spending, which would translate into a larger deficit.

I thought there were some complaints about the recent conservative deficit in the "Canada on brink of election" thread, but going back and skimming through there wasn't. (I'm probably thinking of election threads on other forums I sometimes visit, such as maple leaf web.)

However, there were people complaining about the "massive" deficit Mulroney left, despite the fact that he had to contend with a recession during his tenure as PM which affected his ability to reduce/eliminate the deficit.

 

[Captain.Sassy]

I did a little more digging.

In the approximately 9 years that McGuinty has been in power, total spending has gone up 64%, or roughly 7% per year. (The current inflation rate is 2% and I believe it has been through most of McGuinty's time as premier.)

What does that look like as a share of GDP? NB: when the recession hits, GDP drops and programme spending jacks up, so if you want to show profligacy then your end is best served by limiting your analysis to 2007.

How does the increase to 2007 compare to growth in revenues?

How much of that is due to having to pay out on programmes (like EI) as a sector (manufacturing) slowly declines over that period?

And finally, what was the amount of that increase is attributable to new programme spending not financed by increased revenues?

Cause the last category is what you're really after from what I understand.

Google 'fiscal reference tables' if you want to figure it out. Actually that will give you the answer to the first few questions, but I think for the last two you'll need to delve into the Provincial financial accounts. The Ministry of Finance website probably has some numbers you could use.

Cheers,

CS

Oh, you might also need to pull a GDP series from CANSIM. Remember to compare current to current dollar series; or, if you use constant series, make sure the series use the same base year.

 

[Captain.Sassy]

In the context of this discussion, it doesn't really matter what our tax rate is compared to other countries. What is important is what I, as a Canadian, pay and expect to receive from our tax system. It doesn't matter if some european country enacts a 99% income tax

I dunno. I think when you talk about 'over' or 'under' taxed, at least in an economic sense, you need some some kind of benchmark other than what you personally feel about the matter.

Except the problem is, a minimum wage increase isn't transferring from a rich person to a poor person. It can also transfer from one poor person to another (if for example it increases costs at the local Wal-Mart or McDonald's to other 'working poor'), or from a middle-class person to the poor person (if an increase in minimum wage decreases profits, which affect retirement plans.)

It increases the wage bill going to the lowest paid people. How much of that comes out of decreased profits and how much of it is transferred into increased prices depends on a lot of things but I doubt it's 100% either way.